McKinsey Proposed Paying Pharmacy Corporations Rebates for OxyContin Overdoses

McKinsey Proposed Paying Pharmacy Companies Rebates for OxyContin Overdoses

When Purdue Pharma agreed to plead guilty on criminal charges against OxyContin last month, the Justice Department found that an unidentified consulting firm had been driving sales of the addictive pain reliever, amid increasing public outrage over widespread overdoses.

Documents released in federal bankruptcy court in New York last week show the advisor was McKinsey & Company, the world's most prestigious consulting firm. The 160 pages contain emails and slides containing new details on McKinsey's advice to the Sackler family, Purdue's billionaire owners, and the company's infamous plan to “turbo-charge” OxyContin sales at a time when opioid abuse had killed hundreds of thousands of Americans .

In a 2017 presentation, McKinsey set several options to support sales, according to records filed on behalf of several attorneys general. One was to give Purdue dealers a discount for every OxyContin overdose attributable to the pills they sold.

The presentation estimated how many customers of companies like CVS and Anthem might overdose. It was predicted that 2,484 CVS customers, for example, would either overdose or develop an opioid use disorder in 2019. A discount of $ 14,810 per "event" meant Purdue would pay CVS $ 36.8 million that year.

CVS and Anthem were recently among McKinsey's largest clients. Spokespersons for the two companies said they never received discounts from Purdue for customers who overdosed on OxyContin.

Despite not being charged or sued by the federal government, McKinsey began to worry about legal implications in 2018, according to the documents. After Massachusetts filed a lawsuit against Purdue, Martin Elling, a director of McKinsey's North American pharmaceutical practice, wrote to another senior partner, Arnab Ghatak, “It probably makes sense to have a quick chat with the Risk Committee to see whether we should do anything but remove all of our documents and emails. Don't suspect, but if things get harder there someone could contact us. "

Mr. Ghatak, who also advised Purdue, replied: “Thanks for the heads-up. Will do."

It is not known whether the company's consultants destroyed any records.

The two men were among the most senior consultants at McKinsey. Five years earlier, the documents show, they emailed colleagues about a meeting at which McKinsey persuaded the Sacklers to aggressively market OxyContin.

The meeting "went very well – the room was only occupied by family members, including elderly statesman Dr. Raymond," wrote Ghatak, referring to Purdue's co-founder, doctor Raymond Sackler, who would die in 2017.

Mr. Elling agreed. "At the end of the meeting," he wrote, "the results were crystal clear to everyone, and they sounded like confirmation that we were moving quickly."

McKinsey's plan was adopted despite Russell Gasdia, then Vice President of Sales and Marketing at Purdue, questioning the company's approach and writing Mr Ghatak the night before the meeting that he had real concerns about the need to boost sales of OxyContin.

Another Purdue executive, David Lundie, however, agreed with the strategy. Mr Lundie said the proposal was reported to attract the Sackler family's attention. It did.

Until 2017, Purdue CEO Craig Landau wrote that the crisis was caused by "too many Rxs" being written with "too high a dose" and "too long". The drugs, he said, were "prescribed for conditions that often do not require them" by doctors who "lacked the necessary training in how to use them properly".

When McKinsey was later asked to "dismantle" the aggressive sales campaign, according to court records, Mr. Landau was quoted as saying it was "something we should have done five years ago."

A McKinsey spokesman said Wednesday that the company had "fully cooperated with opioid-related investigations" and announced in 2019 that it would "not advise clients worldwide on opioid-related business".

In a statement last month, the Sacklers said family members "who served on Purdue's board of directors were ethical and lawful".

McKinsey's involvement in the opioid crisis came to light early last year with the release of documents from Massachusetts, one of the states suing Purdue. These records show that McKinsey helped Purdue find a way to "counteract the emotional messages of mothers with overdosed teenagers" by OxyContin.

On Tuesday, Purdue pleaded guilty to, among other things, fraud against federal health officials and illegal setbacks to doctors. The company also faces fines of around $ 8.3 billion. As part of the settlement, members of the Sackler family pay civil fines of $ 225 million.

In a statement released after the settlement was announced in October, Purdue said it "deeply regrets and accepts responsibility for the regrets related to the commercialization of OxyContin."

The federal deal with Purdue comes as states and municipalities demand compensation from opioid manufacturers for helping a health crisis that has killed more than 450,000 Americans since 1999. Purdue is now aiming for bankruptcy protection like other manufacturers.

"This is the Banality of Evil, M.B.A. Edition," said Anand Giridharadas, a former McKinsey advisor who reviewed the documents, of the company's work with Purdue. “You knew what was going on. And they found a way to look past it to answer the only questions that mattered to them: how to make money for the customer and how to protect yourself when the walls close. "

Mr Giridharadas is a New York Times associate who wrote a book in 2018 examining the power of elites, including those at McKinsey, on how they evade responsibility for social harm.

In recent years, McKinsey has drawn criticism and unwanted attention for its global business, including in authoritarian countries like China, Russia, and Saudi Arabia. Business in South Africa was decimated after McKinsey worked with companies implicated in a corruption scandal that led to the overthrow of the country's president. In the United States, under President Trump, McKinsey worked with Immigration and Customs Enforcement to propose ways to reduce food and housing spending for inmates.

The documents, released last week, describe McKinsey's work with Purdue in 2008, a year after the drug company pleaded guilty to misleading regulators. The Food and Drug Administration had previously advised Purdue that OxyContin would have sales restrictions and that doctors prescribing it would need special training.

The Sackler family saw these rules as a threat and planned with McKinsey to team up with other opioid manufacturers to roll them back, according to an email. McKinsey prepared Purdue executives for an important meeting ahead of an F.D.A. Advisory Committee is reviewing its proposed reformulation of OxyContin to make it less susceptible to abuse. The reformulation was launched in 2010.

McKinsey was putting together informational materials that anticipated questions Purdue would receive. One possible question: "Who at Purdue is personally responsible for these deaths?"

The suggested answer: "We all feel responsible."

Dr. Richard Sackler, now the family patriarch, was satisfied with the preparations and wrote to his daughter in an email in January 2009: “Marianna, I am writing to tell you how impressed I have been with the preparation for the F.D.A. was. To meet. Both the method and process and content were excellent and a great departure from such efforts in the past. "

Purdues F.D.A. The meeting seemed to be at least partially successful. "To this day, the F.D.A. OxyContin prescribers have never required special training, ”wrote the prosecutors who filed the documents last week.


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